Tuesday, September 16, 2008

Here's another Heritage Foundation piece from July 2008 on the criminal actions by employees and members of Congress related to Fannie and Freddie. Check out the hyperlinks for more background. As I said last week on R.C., if these were Conservatives involved, the Lib-led Congress would stop everything else to start investigations...

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In 2004, after a tip from a whistleblower who was later fired, the Office of Federal Housing Enterprise Oversight (OFHEO) issued a report finding that the government-sponsored entity Fannie Mae had engaged in Enron-like accounting machinations that allowed Fannie to overstate its earnings and underestimate the risk the company faced. The accounting wizardry Fannie engaged in was designed so that Fannie could meet profit targets to maximize bonus payments to company executives like Clinton administration deputy attorney general Jamie Gorelick and Carter administration assistant director for domestic policy Franklin Raines.

Many parts of the bill the Senate passed last week only continue the worst aspects of the crony capitalism at the hard of Freddie’s success. This is especially true of the Community Development Block Grant funds that have long been a goal of partisan housing activist groups like ACORN. There is an opportunity here to use the recapitalization the White House is now proposing to re-organize housing finance by breaking up Fannie and Freddie and creating several smaller truly private entities that can compete.

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